Reliance Capital to buy Goldman's Indian fund unit for Rs 243 crore

Deutsche Bank, Morgan Stanley, Japan's Daiwa and Fidelity Worldwide have all sold their India funds business in recent years

Reliance Capital Asset Management said on Wednesday it would buy Goldman Sachs fund management unit in India for Rs 243 crore ($37.5 million), marking the latest exit by a foreign fund manager.

Asset managers in India have struggled for years with high redemptions after the financial crisis, leading to some high-profile exits.

Although retail investments have surged this year, competition for funds has been steep given India has more than 40 asset managers, raising expectations for further consolidation.

Reliance Capital Asset Management is India's third largest fund house and manages about Rs 1.53 trillion ($23.50 billion) in total assets. Last week, Japan's Nippon Life raised its stake in the fund management unit to 49%.

"This acquisition is an important first step in our strategy to strengthen our businesses through selective inorganic growth," said Sam Ghosh, executive director of Reliance Capital.

"The transaction will add over half a percentage to our market share. We will ensure we maintain seamless continuity for all the Goldman Sachs Asset Management India fund investors across all schemes," added Sundeep Sikka, chief executive of Reliance Capital Asset Management.

Goldman Sachs' India onshore arm currently manages 12 mutual fund schemes, including some 10 exchange-traded funds. More than $1 billion worth of assets are under its management in the country, including $335 million of exchange-traded funds of state-run companies.

Goldman had expanded its India fund operations through its 2011 acquisition of exchange-traded fund specialist Benchmark Asset Management.

Its exit comes after Deutsche Bank sold its funds business to Pramerica earlier this year. Morgan Stanley, Japan's Daiwa and Fidelity Worldwide have all sold their India funds business in recent years.

($1 = Rs 65.1150)